#55 Credit Part 3: The Steward of Your Credit

Let’s face it!  We are a “credit driven” society!  So, it’s easy to see that we should take our personal credit management responsibilities very seriously.  “Credit” is a social and business system that can help and enhance our lives – or become a serious problem affecting our ability to grow and progress financially.

I call that management task the process of being the steward of your personal credit system! The first two parts of this series looked at exactly what Credit is, and how it is of value in your financial aspirations; then, how to go about fixing a Credit picture that’s in trouble.  Now, I’ll discuss ways to guide and benefit from a good Credit profile.

Staying on top of the status of any form of Credit that you implement is the key!  It only takes one blip to endanger your Credit condition – and, therefrom, your Credit “score.”  Just as you carefully check on the accuracy of your utilities statements, the phone bill or the tab you get at the end of a nice dinner out – knowing the status of your Credit accounts is important. 

There are Installment accounts, Revolving accounts and Mortgage accounts.  You’ll want to always be sure that all charges made on your Revolving accounts were made by you! 

Revolving accounts such as department stores usually operate on 30 day billing cycles and (like credit cards) charge late payment fees.  You want to try to stay current so that late payment – or under-minimum payment – patterns do not develop.  Installment accounts such as personal loans or merchandize loans (such as boats or cars) might have fluxuating interest structures to keep an eye on.

Try to develop pay-out patterns for your payables in a way that you can comfortably support with your earnings patterns and cash flow.   While financial information for expenses such as utilities and phone do not routinely appear on a credit report, they may appear if they have bad payment patterns, have gone to collection or progress to termination of service.

Some people develop formulas for payment management on credit cards, which, after all are advanced loans allowing gradual payment.  One such formula for monthly credit card statements might be:  Pay the Interest charged that month, double the Minimum required to avoid penalty, plus another fixed amount that you can regularly manage.  Make a realistic plan that you know you can follow.

Remember, while it feels good to buy something large for cash (and be done with it) visible, active Credit accounts speak loudly to how you manage your money, keep your financial agreements and illustrate that you are a good risk!  For instance, you might consider putting half down on that car or boat and financing the other half to establish good Credit.

It’s smart to pull an annual “Credit Report” from Equifax, Trans Union and Experian.  (You can get one free report each year, but if you also want your score, there will be a fee.)  Credit reporting varies among the providers, and sometimes someone else’s information accidentally lands in your report.  You would want that corrected immediately.

An important factor for being a good – and effective – steward of your Credit profile is living within your means.

Acquiring a credit card with a tempting line of credit is comparatively simple.  Using it smartly can be difficult for some.   Your best financial possibilities are closely tied to how your Credit profile stacks up when you need it to work for you.

Whether t’s time to buy that first home or an SUV that can accommodate that growing family, your Credit Report and Credit Score are important determining factors!  

Is your Credit working for you – or against you?  The answer, the work and the results are all up to you!